BILL NUMBER: SB 16 CHAPTERED 10/09/01 CHAPTER 614 FILED WITH SECRETARY OF STATE OCTOBER 9, 2001 APPROVED BY GOVERNOR OCTOBER 8, 2001 PASSED THE SENATE SEPTEMBER 13, 2001 PASSED THE ASSEMBLY SEPTEMBER 10, 2001 AMENDED IN ASSEMBLY SEPTEMBER 6, 2001 AMENDED IN ASSEMBLY AUGUST 27, 2001 AMENDED IN ASSEMBLY AUGUST 27, 2001 AMENDED IN ASSEMBLY AUGUST 20, 2001 AMENDED IN ASSEMBLY JULY 19, 2001 AMENDED IN SENATE MAY 2, 2001 AMENDED IN SENATE APRIL 17, 2001 INTRODUCED BY Senator Figueroa DECEMBER 4, 2000 An act to amend Sections 805, 805.1, 805.5, 806, and 2313 of, and to add Sections 805.2, 805.6, and 805.7 to, the Business and Professions Code, relating to peer review. LEGISLATIVE COUNSEL'S DIGEST SB 16, Figueroa. Peer review. Existing law provides a procedure for the professional review of specified healing arts licentiates by a peer review body, defined as including, among other entities, a nonprofit hospital service plan. Under existing law, a peer review body is required to file with the agency having regulatory jurisdiction over the licentiate a report, designated as an "805" report, if the peer review body takes one of several specified actions against the licentiate. Existing law makes the failure to file this report punishable by a fine of not more than $5,000, or if the failure is intentional, by a fine of not more than $10,000. This bill would delete a nonprofit hospital service plan from those entities included within the definition of a peer review body and would specify that disability insurers that contract with licentiates to provide services at alternative rates of payment are subject to the professional peer review process. This bill would add to the specified actions that a peer review body is required to report, within a specified timeframe, in an 805 report to the relevant licensing agency the licentiate's withdrawal or abandonment of an initial or renewal application for staff privileges or membership after notice of an impending investigation or denial of the application for a medical disciplinary cause or reason. The bill would also increase the amount of the fine for the failure to file an 805 report to not more than $50,000 per violation, except as specified, and to not more than $100,000 if the failure is willful, as defined. The bill would specify that the willful failure to file an 805 report by a licensed healing arts practitioner may constitute unprofessional conduct and that a person who is alleged to have violated this requirement may assert any available legal defense. The bill would authorize the Medical Board of California, the Osteopathic Medical Board of California, and the Dental Board of California to audit, as specified, any peer review body to determine its compliance with its responsibilities to file 805 reports and to establish an electronic notification system of the filing of 805 reports. This bill would additionally require the Medical Board of California to work with interested parties in the pursuit and establishment of a pilot program to provide specified health care professionals remedial training and education and would require the board to report its evaluation, findings, and recommendations regarding the implementation of this statewide program to the Legislature before April 1, 2003. This bill would state the intent of the Legislature to provide for a comprehensive peer review study to be conducted by the Institute for Medical Quality that would, among other things, review and evaluate the existing peer review process in this state. The bill would require that the institute work with and be under the general oversight of the board's medical director in conducting the study and that the institute submit a written report regarding its findings and recommendations to the board and the Legislature by November 1, 2002. This bill would also require the Division of Medical Quality of the Medical Board of California to report annually to the Legislature the total number of reports received pursuant to Section 805. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares the following: (a) Peer review is an essential component of the regulation by certain licensing agencies of the quality of health care practice in this state and of the health care community's responsibility to engage in active self-regulation of the quality of health care services provided to Californians. Because licensed health care practitioners and the administrators of the facilities within which these licentiates practice are in the best position to observe the quality of health care services being provided to the public, it is appropriate for licentiates to participate in early intervention and quality improvement review of their peers. To this end, it is important for a maximum level of cooperation to exist between the relevant licensing agencies and peer review bodies. (b) To the extent possible, and consistent with the primary duty to protect the public, licensing agencies shall attempt to investigate information derived from reports filed pursuant to Section 805 of the Business and Professions Code in a manner that is not disruptive of a patient's privacy or a licentiate's practice. Specifically, unless an investigation warrants a greater intrusion into a particular identifiable patient's medical information, a licensing agency shall attempt to conduct initial reviews by using redacted records and other sources of information. However, nothing in this act shall be construed to narrow, qualify, or overrule the authority of a licensing agency to obtain access to patient information if it is necessary in order to completely and accurately investigate a report concerning its licentiates. SEC. 2. Section 805 of the Business and Professions Code is amended to read: 805. (a) As used in this section, the following terms have the following definitions: (1) "Peer review body" includes: (A) A medical or professional staff of any health care facility or clinic licensed under Division 2 (commencing with Section 1200) of the Health and Safety Code or of a facility certified to participate in the federal Medicare program as an ambulatory surgical center. (B) A health care service plan registered under Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code or a disability insurer that contracts with licentiates to provide services at alternative rates of payment pursuant to Section 10133 of the Insurance Code. (C) Any medical, psychological, marriage and family therapy, social work, dental, or podiatric professional society having as members at least 25 percent of the eligible licentiates in the area in which it functions (which must include at least one county), which is not organized for profit and which has been determined to be exempt from taxes pursuant to Section 23701 of the Revenue and Taxation Code. (D) A committee organized by any entity consisting of or employing more than 25 licentiates of the same class that functions for the purpose of reviewing the quality of professional care provided by members or employees of that entity. (2) "Licentiate" means a physician and surgeon, podiatrist, clinical psychologist, marriage and family therapist, clinical social worker, or dentist. "Licentiate" also includes a person authorized to practice medicine pursuant to Section 2113. (3) "Agency" means the relevant state licensing agency having regulatory jurisdiction over the licentiates listed in paragraph (2). (4) "Staff privileges" means any arrangement under which a licentiate is allowed to practice in or provide care for patients in a health facility. Those arrangements shall include, but are not limited to, full staff privileges, active staff privileges, limited staff privileges, auxiliary staff privileges, provisional staff privileges, temporary staff privileges, courtesy staff privileges, locum tenens arrangements, and contractual arrangements to provide professional services, including, but not limited to, arrangements to provide outpatient services. (5) "Denial or termination of staff privileges, membership, or employment" includes failure or refusal to renew a contract or to renew, extend, or reestablish any staff privileges, if the action is based on medical disciplinary cause or reason. (6) "Medical disciplinary cause or reason" means that aspect of a licentiate's competence or professional conduct which is reasonably likely to be detrimental to patient safety or to the delivery of patient care. (7) "805 report" means the written report required under subdivision (b). (b) The chief of staff of a medical or professional staff or other chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of any licensed health care facility or clinic shall file an 805 report with the relevant agency within 15 days after the effective date of any of the following which take place as a result of an action of a peer review body: (1) A licentiate's application for staff privileges or membership is denied or rejected for a medical disciplinary cause or reason. (2) A licentiate's membership, staff privileges, or employment is terminated or revoked for a medical disciplinary cause or reason. (3) Restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a cumulative total of 30 days or more for any 12-month period, for a medical disciplinary cause or reason. (c) The chief of staff of a medical or professional staff or other chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of any licensed health care facility or clinic shall file an 805 report with the relevant agency within 15 days after any of the following takes place after notice of either an investigation or the impending denial or rejection of the application for a medical disciplinary cause or reason: (1) Resignation or leave of absence from membership, staff, or employment. (2) The withdrawal or abandonment of a licentiate's application for staff privileges or membership. (3) The request for renewal of those privileges or membership is withdrawn or abandoned. (d) For purposes of filing an 805 report, the signature of at least one of the individuals indicated in subdivision (b) or (c) on the completed form shall constitute compliance with the requirement to file the report. (e) An 805 report shall also be filed within 15 days following the imposition of summary suspension of staff privileges, membership, or employment, if the summary suspension remains in effect for a period in excess of 14 days. (f) A copy of the 805 report, and a notice advising the licentiate of his or her right to submit additional statements or other information pursuant to Section 800, shall be sent by the peer review body to the licentiate named in the report. The information to be reported in an 805 report shall include the name and license number of the licentiate involved, a description of the facts and circumstances of the medical disciplinary cause or reason, and any other relevant information deemed appropriate by the reporter. A supplemental report shall also be made within 30 days following the date the licentiate is deemed to have satisfied any terms, conditions, or sanctions imposed as disciplinary action by the reporting peer review body. In performing its dissemination functions required by Section 805.5, the agency shall include a copy of a supplemental report, if any, whenever it furnishes a copy of the original 805 report. If another peer review body is required to file an 805 report, a health care service plan is not required to file a separate report with respect to action attributable to the same medical disciplinary cause or reason. If the Medical Board of California or a licensing agency of another state revokes or suspends, without a stay, the license of a physician, a peer review body is not required to file an 805 report when it takes an action as a result of the revocation or suspension. (g) The reporting required herein shall not act as a waiver of confidentiality of medical records and committee reports. The information reported or disclosed shall be kept confidential except as provided in subdivision (c) of Section 800 and Sections 803.1 and 2027, provided that a copy of the report containing the information required by this section may be disclosed as required by Section 805.5 with respect to reports received on or after January 1, 1976. (h) The Medical Board of California, the Osteopathic Medical Board of California, and the Dental Board of California shall disclose reports as required by Section 805.5. (i) An 805 report shall be maintained by an agency for dissemination purposes for a period of three years after receipt. (j) No person shall incur any civil or criminal liability as the result of making any report required by this section. (k) A willful failure to file an 805 report by any person who is designated or otherwise required by law to file an 805 report is punishable by a fine not to exceed one hundred thousand dollars ($100,000) per violation. The fine may be imposed in any civil or administrative action or proceeding brought by or on behalf of any agency having regulatory jurisdiction over the person regarding whom the report was or should have been filed. If the person who is designated or otherwise required to file an 805 report is a licensed physician and surgeon, the action or proceeding shall be brought by the Medical Board of California. The fine shall be paid to that agency but not expended until appropriated by the Legislature. A violation of this subdivision may constitute unprofessional conduct by the licentiate. A person who is alleged to have violated this subdivision may assert any defense available at law. As used in this subdivision, "willful" means a voluntary and intentional violation of a known legal duty. (l) Except as otherwise provided in subdivision (k), any failure by the administrator of any peer review body, the chief executive officer or administrator of any health care facility, or any person who is designated or otherwise required by law to file an 805 report, shall be punishable by a fine that under no circumstances shall exceed fifty thousand dollars ($50,000) per violation. The fine may be imposed in any civil or administrative action or proceeding brought by or on behalf of any agency having regulatory jurisdiction over the person regarding whom the report was or should have been filed. If the person who is designated or otherwise required to file an 805 report is a licensed physician and surgeon, the action or proceeding shall be brought by the Medical Board of California. The fine shall be paid to that agency but not expended until appropriated by the Legislature. The amount of the fine imposed, not exceeding fifty thousand dollars ($50,000) per violation, shall be proportional to the severity of the failure to report and shall differ based upon written findings, including whether the failure to file caused harm to a patient or created a risk to patient safety; whether the administrator of any peer review body, the chief executive officer or administrator of any health care facility, or any person who is designated or otherwise required by law to file an 805 report exercised due diligence despite the failure to file or whether they knew or should have known that an 805 report would not be filed; and whether there has been a prior failure to file an 805 report. The amount of fine imposed may also differ based on whether a health care facility is a small or rural hospital as defined in Section 124840 of the Health and Safety Code. (m) A health care service plan registered under Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code or a disability insurer that negotiates and enters into a contract with licentiates to provide services at alternative rates of payment pursuant to Section 10133 of the Insurance Code, when determining participation with the plan or insurer, shall evaluate, on a case-by-case basis, licentiates who are the subject of an 805 report, and not automatically exclude or deselect these licentiates. SEC. 3. Section 805.1 of the Business and Professions Code is amended to read: 805.1. (a) The Medical Board of California, the Osteopathic Medical Board of California, and the Dental Board of California shall be entitled to inspect and copy the following documents in the record of any disciplinary proceeding resulting in action that is required to be reported pursuant to Section 805: (1) Any statement of charges. (2) Any document, medical chart, or exhibits in evidence. (3) Any opinion, findings, or conclusions. (b) The information so disclosed shall be kept confidential and not subject to discovery, in accordance with Section 800, except that it may be reviewed, as provided in subdivision (c) of Section 800, and may be disclosed in any subsequent disciplinary hearing conducted pursuant to the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code). SEC. 4. Section 805.2 is added to the Business and Professions Code, to read: 805.2. (a) It is the intent of the Legislature to provide for a comprehensive study of the peer review process as it is conducted by peer review bodies defined in paragraph (1) of subdivision (a) of Section 805, in order to evaluate the continuing validity of Section 805 and Sections 809 to 809.8, inclusive, and their relevance to the conduct of peer review in California. The Medical Board of California shall contract with the Institute for Medical Quality to conduct this study, which shall include, but not be limited to, the following components: (1) A comprehensive description of the various steps of and decisionmakers in the peer review process as it is conducted by peer review bodies throughout the state, including the role of other related committees of acute care health facilities and clinics involved in the peer review process. (2) A survey of peer review cases to determine the incidence of peer review by peer review bodies, and whether they are complying with the reporting requirement in Section 805. (3) A description and evaluation of the roles and performance of various state agencies, including the State Department of Health Services and occupational licensing agencies that regulate healing arts professionals, in receiving, reviewing, investigating, and disclosing peer review actions, and in sanctioning peer review bodies for failure to comply with Section 805. (4) An assessment of the cost of peer review to licentiates and the facilities which employ them. (5) An assessment of the time consumed by the average peer review proceeding, including the hearing provided pursuant to Section 809.2, and a description of any difficulties encountered by either licentiates or facilities in assembling peer review bodies or panels to participate in peer review decisionmaking. (6) An assessment of the need to amend Section 805 and Sections 809 to 809.8, inclusive, to ensure that they continue to be relevant to the actual conduct of peer review as described in paragraph (1), and to evaluate whether the current reporting requirement is yielding timely and accurate information to aid licensing boards in their responsibility to regulate and discipline healing arts practitioners when necessary, and to assure that peer review bodies function in the best interest of patient care. (7) Recommendations of additional mechanisms to stimulate the appropriate reporting of peer review actions under Section 805. (8) Recommendations regarding the Section 809 hearing process to improve its overall effectiveness and efficiency. (b) The Institute of Medical Quality shall exercise no authority over the peer review processes of peer review bodies. However, peer review bodies, health care facilities, health care clinics, and health care service plans shall cooperate with the institute and provide data, information, and case files as requested in the timeframe specified by the institute. (c) The institute shall work in cooperation with and under the general oversight of the Medical Director of the Medical Board of California and shall submit a written report with its findings and recommendations to the board and the Legislature no later than November 1, 2002. SEC. 5. Section 805.5 of the Business and Professions Code is amended to read: 805.5. (a) Prior to granting or renewing staff privileges for any physician and surgeon, psychologist, podiatrist, or dentist, any health facility licensed pursuant to Division 2 (commencing with Section 1200) of the Health and Safety Code, or any health care service plan or medical care foundation, or the medical staff of the institution shall request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California to determine if any report has been made pursuant to Section 805 indicating that the applying physician and surgeon, psychologist, podiatrist, or dentist has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted as provided in Section 805. The request shall include the name and California license number of the physician and surgeon, psychologist, podiatrist, or dentist. Furnishing of a copy of the 805 report shall not cause the 805 report to be a public record. (b) Upon a request made by, or on behalf of, an institution described in subdivision (a) or its medical staff, which is received on or after January 1, 1980, the board shall furnish a copy of any report made pursuant to Section 805. However, the board shall not send a copy of a report (1) if the denial, removal, or restriction was imposed solely because of the failure to complete medical records, (2) if the board has found the information reported is without merit, or (3) if a period of three years has elapsed since the report was submitted. This three-year period shall be tolled during any period the licentiate has obtained a judicial order precluding disclosure of the report, unless the board is finally and permanently precluded by judicial order from disclosing the report. In the event a request is received by the board while the board is subject to a judicial order limiting or precluding disclosure, the board shall provide a disclosure to any qualified requesting party as soon as practicable after the judicial order is no longer in force. In the event that the board fails to advise the institution within 30 working days following its request for a report required by this section, the institution may grant or renew staff privileges for the physician and surgeon, psychologist, podiatrist, or dentist. (c) Any institution described in subdivision (a) or its medical staff that violates subdivision (a) is guilty of a misdemeanor and shall be punished by a fine of not less than two hundred dollars ($200) nor more than one thousand two hundred dollars ($1,200). SEC. 6. Section 805.6 is added to the Business and Professions Code, to read: 805.6. (a) The Medical Board of California, the Osteopathic Medical Board, and the Dental Board of California shall establish a system of electronic notification that is either initiated by the board or can be accessed by qualified subscribers, and that is designed to achieve early notification to qualified recipients of the existence of new reports that are filed pursuant to Section 805. (b) The State Department of Health Services shall notify the appropriate licensing agency of any reporting violations pursuant to Section 805. (c) The Department of Managed Health Care shall notify the appropriate licensing agency of any reporting violations pursuant to Section 805. SEC. 7. Section 805.7 is added to the Business and Professions Code, to read: 805.7. (a) The Medical Board of California shall work with interested parties in the pursuit and establishment of a pilot program, similar to those proposed by the Citizens Advocacy Center, of early detection of potential quality problems and resolutions through informal educational interventions. (b) The Medical Board of California shall report to the Legislature its evaluation and findings and shall include recommendations regarding the statewide implementation of this pilot program before April 1, 2003. SEC. 8. Section 806 of the Business and Professions Code is amended to read: 806. Each agency in the department receiving reports pursuant to the preceding sections shall prepare a statistical report based upon these records for presentation to the Legislature not later than 30 days after the commencement of each regular session of the Legislature, including by the type of peer review body, and, where applicable, type of health care facility, the number of reports received and a summary of administrative and disciplinary action taken with respect to these reports and any recommendations for corrective legislation if the agency considers legislation to be necessary. SEC. 9. Section 2313 of the Business and Professions Code is amended to read: 2313. The Division of Medical Quality shall report annually to the Legislature, no later than October 1 of each year, the following information: (a) The total number of temporary restraining orders or interim suspension orders sought by the board or the division to enjoin licensees pursuant to Sections 125.7, 125.8 and 2311, the circumstances in each case that prompted the board or division to seek that injunctive relief, and whether a restraining order or interim suspension order was actually issued. (b) The total number and types of actions for unprofessional conduct taken by the board or a division against licensees, the number and types of actions taken against licensees for unprofessional conduct related to prescribing drugs, narcotics, or other controlled substances, including those related to the undertreatment or undermedication of pain. (c) Information relative to the performance of the division, including the following: number of consumer calls received; number of consumer calls or letters designated as discipline-related complaints; number of calls resulting in complaint forms being sent to complainants and number of forms returned; number of Section 805 reports by type; number of Section 801 and Section 803 reports; coroner reports received; number of convictions reported to the division; number of criminal filings reported to the division; number of complaints and referrals closed, referred out, or resolved without discipline, respectively, prior to accusation; number of accusations filed and final disposition of accusations through the division and court review, respectively; final physician discipline by category; number of citations issued with fines and without fines, and number of public reprimands issued; number of cases in process more than six months from receipt by the division of information concerning the relevant acts to the filing of an accusation; average and median time in processing complaints from original receipt of complaint by the division for all cases at each stage of discipline and court review, respectively; number of persons in diversion, and number successfully completing diversion programs and failing to do so, respectively; probation violation reports and probation revocation filings and dispositions; number of petitions for reinstatement and their dispositions; and caseloads of investigators for original cases and for probation cases, respectively. "Action," for purposes of this section, includes proceedings brought by, or on behalf of, the division against licensees for unprofessional conduct which have not been finally adjudicated, as well as disciplinary actions taken against licensees. (d) The total number of reports received pursuant to Section 805 by the type of peer review body reporting and, where applicable, the type of health care facility involved and the total number and type of administrative or disciplinary actions taken by the Medical Board of California with respect to the reports.